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/Not for distribution to U.S. newswire services or for dissemination in
the United States/

CALGARY, Jan. 23, 2012 /CNW/ - Oncolytics Biotech Inc. ("Oncolytics" or
the "Company") (TSX:ONC, NASDAQ: ONCY) today announced that it has
entered into an agreement with a syndicate of underwriters pursuant to
which they have agreed to purchase, on a bought deal basis, 3,572,000
common shares (the "Shares") of the Company at a price of Cdn$4.20 per
Share for gross proceeds to the Company of approximately Cdn$15,002,400
(the "Offering"). The Offering will be conducted through a syndicate of
underwriters led by Paradigm Capital Inc., and including Canaccord
Genuity Corp., RBC Capital Markets, Bloom Burton & Co. Inc., and Byron
Capital Markets Ltd., (collectively the "Underwriters"). In addition,
the Corporation has agreed to grant to the Underwriters an option (the
"Over-Allotment Option") to purchase up to an additional 15% of the
number of Shares sold under the Offering at a price of Cdn$4.20 per
share, on the same terms and conditions as the Offering, exercisable at
any time, in whole or in part, until the date that is 30 days following
the closing of the Offering. In the event that the Over-Allotment
Option is exercised in its entirety, the aggregate gross proceeds of
the Offering to Oncolytics will be approximately Cdn$17,252,760.

The Shares will be offered in Canada by way of a shelf prospectus
supplement to a short-form base shelf prospectus dated June 10, 2010,
that has been filed in the provinces of British Columbia, Alberta,
Manitoba and Ontario pursuant to National Instrument 44-101 and
National Instrument 44-102 and in the United States or to, or for the
account or benefit of, a "U.S. person" (as defined in Regulation S
under the United States Securities Act of 1933, as amended (the "U.S.
Securities Act")) on a private placement basis pursuant to available
exemptions from the registration requirements of the U.S. Securities
Act and in compliance with any applicable securities laws of any state
of the United States.

Oncolytics intends to use the net proceeds from the Offering to fund its
ongoing Phase III combination REOLYSIN® and paclitaxel/carboplatin trial for patients with platinum-failed head
and neck cancers, its other clinical development and research and
development activities, and for general corporate and working capital
purposes.

The transaction is subject to the receipt of all necessary regulatory
and stock exchange approvals. The transaction is expected to close on
or about February 8, 2012.

The securities to be issued by Oncolytics have not been and will not be
registered under the U.S. Securities Act or the securities laws of any
state of the United States, and may not be offered or sold in the
United States or to, or for the account or benefit of, U.S. persons (as
defined in Regulation S under the U.S. Securities Act) unless
registered under the U.S. Securities Act and applicable securities laws
of any state of the United States or pursuant to an exemption from such
registration requirements. This press release shall not constitute an
offer to sell or the solicitation of an offer to buy in the United
States nor shall there be any sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful.

About Oncolytics Biotech Inc.
Oncolytics is a Calgary-based biotechnology company focused on the
development of oncolytic viruses as potential cancer therapeutics.
Oncolytics' clinical program includes a variety of human trials
including a Phase III trial in head and neck cancers using REOLYSIN,
its proprietary formulation of the human reovirus.

This press release contains forward-looking statements, within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements,including the Company's expectations related to the pricing, timing and
placement of common shares; the Company's belief as to the potential of
REOLYSIN as a cancer therapeutic; the Company's expectations as to the
success of its research and development programs in 2012 and beyond,
the Company's planned operations, the value of the additional patents
and intellectual property; the Company's expectations related to the
applications of the patented technology; the Company's expectations as
to adequacy of its existing capital resources; the design, timing,
success of planned clinical trial programs; and other statements
related to anticipated developments in the Company's business and
technologies involve known and unknown risks and uncertainties, which
could cause the Company's actual results to differ materially from
those in the forward-looking statements. Such risks and uncertainties
include, among others, the pricing and completion of the contemplated
offering, availability of funds and resources to pursue research and
development projects, the efficacy of REOLYSIN as a cancer treatment,
the success and timely completion of clinical studies and trials, the
Company's ability to successfully commercialize REOLYSIN, uncertainties
related to the research and development of pharmaceuticals,
uncertainties related to the regulatory process and general changes to
the economic environment. Investors should consult the Company's
quarterly and annual filings with the Canadian and U.S. securities
commissions for additional information on risks and uncertainties
relating to the forward-looking statements. Investors are cautioned
against placing undue reliance on forward-looking statements. The
Company does not undertake to update these forward-looking statements,
except as required by applicable laws.